Financial Accounting · Property, Plant and Equipment (AS 10)

AS 10 Disclosure Requirements and Practical Problems

Updated 10 October 2026 · Fact-checked

AS 10 requires you to disclose, for each class of property, plant and equipment, the measurement basis, depreciation method, useful lives or rates, opening and closing gross and accumulated depreciation, and a reconciliation of carrying amount. Practical problems combine cost, depreciation, revaluation and disposal. Solve them in order: cost, depreciation, revaluation, disposal, then disclosure.

Understand Disclosure Requirements and Practical Problems in AS 10

AS 10 does not stop at measuring an asset. It also tells you what to show users of the financial statements. The idea is simple: depreciation method and useful life are matters of judgement, so readers must be told the choices made. Then they can review the policy and compare one enterprise with another (paragraph 83).

Disclosure is made class by class, for example land, buildings, plant and machinery. Paragraph 81 asks for the measurement basis (cost model or revaluation model), the depreciation methods, the useful lives or rates, the gross carrying amount and accumulated depreciation at the start and end of the period, and a reconciliation of the carrying amount. If your lives or rates differ from those in the statute governing the enterprise, you must say so specifically.

Paragraph 82 adds further items: restrictions on title and assets pledged as security, expenditure recognised during construction, contractual commitments to acquire assets, compensation from third parties included in profit and loss (if not shown separately on its face), and assets retired from active use and held for disposal.

Practical problems join the whole chapter together. You compute cost (cash or cash equivalents paid, or fair value of other consideration given), charge depreciation (systematic allocation of the depreciable amount over the useful life), handle a revaluation, and record a disposal. Then you present the figures in the reconciliation format. Revaluation rules matter most here: an increase goes to revaluation surplus unless it reverses an earlier decrease charged to profit and loss (paragraph 42). A decrease goes to profit and loss unless a revaluation surplus balance exists for that same asset (paragraph 43).

Key rules to remember

Carrying amount reconciliation: Closing carrying amount = Opening carrying amount + Additions − Assets retired/disposed − Depreciation ± Revaluation changes − Impairment losses (net of reversals) ± Other changes; Paragraph 81(e) lists the items. Use only those that arise in the question. Show gross block and accumulated depreciation separately as well.
Carrying amount of an asset: Carrying amount = Gross carrying amount − Accumulated depreciation (including accumulated impairment losses); Paragraph 81(d) asks for gross amount and accumulated depreciation at the start and end of the period.
Straight-line depreciation: Annual depreciation = (Cost − Residual value) ÷ Useful life in years; Prorate by months for additions and disposals during the year unless the question says otherwise.
Revaluation increase: Increase = Fair value − Carrying amount; credit to revaluation surplus, except to the extent it reverses an earlier decrease of the same asset charged to profit and loss; Paragraph 42.
Revaluation decrease: Decrease = Carrying amount − Fair value; debit revaluation surplus to the extent of its credit balance for that asset, balance to profit and loss; Paragraph 43.
Surplus transfer on use: Transfer = Depreciation on revalued carrying amount − Depreciation on original cost; Paragraph 44. It goes to revenue reserves, not through profit and loss.
Profit or loss on disposal: Profit or loss = Sale proceeds − Carrying amount at date of sale; Bring depreciation up to the date of sale first.

How to solve Disclosure Requirements and Practical Problems in AS 10 questions

Use the same sequence for any integrated AS 10 problem. It keeps the working clean and earns step marks.

1Read the question and list each asset or class, with dates of purchase, revaluation and sale.
2Compute cost of each asset: purchase price plus directly attributable costs, as the question gives them.
3Work out depreciation for each period, prorating by months where assets are added or sold.
4Apply revaluation rules: find the increase or decrease against carrying amount, then decide between revaluation surplus and profit and loss.
5Record disposals: depreciate up to the date of sale, find the carrying amount, and compute profit or loss.
6Prepare the asset account or a schedule showing opening balance, additions, disposals, depreciation and closing balance, for both gross block and accumulated depreciation.
7Add the disclosure notes asked for: measurement basis, method, lives or rates, reconciliation, pledged assets, commitments.
8Check that closing carrying amount equals gross block less accumulated depreciation.

Quickest way: Columnar schedule method

When to use it: Use it when a question has several assets or years and asks for a reconciliation or balance sheet figures.

Draw columns: Gross block, Accumulated depreciation, Carrying amount.
Fill the opening row from the question.
Add rows for additions, revaluation, disposals and depreciation, and fill each column in turn.
Total the columns and confirm gross block less accumulated depreciation equals carrying amount.
Copy the totals into the note or reconciliation required.

Common mistakes in Disclosure Requirements and Practical Problems in AS 10

Disclosing only a total for all property, plant and equipment.
Students forget that AS 10 asks for disclosure for each class.
Fix: Split the note by class such as land, buildings, plant and machinery, and state method and life for each.
Taking a revaluation decrease straight to profit and loss.
Students remember that decreases are expenses and ignore the surplus.
Fix: First check for a credit balance in revaluation surplus for that same asset. Debit the surplus to that extent, then charge the rest to profit and loss.
Crediting a revaluation increase to profit and loss.
Students treat the gain like normal income.
Fix: Credit revaluation surplus, except to the extent it reverses an earlier decrease of the same asset that was charged to profit and loss.
Computing profit on sale without charging depreciation up to the sale date.
Students use last year's closing carrying amount.
Fix: Depreciate for the months used in the year of sale, then compare proceeds with the updated carrying amount.
Routing the transfer of surplus to reserves through profit and loss.
Students link depreciation difference to the income statement.
Fix: Under paragraph 44 the transfer to revenue reserves is not made through profit and loss. Show it as a movement within owners' interests.
Omitting pledged assets, commitments or assets held for disposal from the notes.
Students focus on the numbers and treat paragraph 82 items as optional.
Fix: Scan the question for security, capital orders and retired assets, and include each in the disclosure.

Worked examples

Example 1

Shreeji Industries Ltd bought machinery on 1 April 2024 for ₹10,00,000, with a useful life of 10 years and nil residual value, using straight-line depreciation. On 31 March 2026 the machinery was revalued to a fair value of ₹9,60,000. Show the revaluation entry and the treatment, and state what the company must disclose about it.

Show the solution

Annual depreciation = ₹10,00,000 ÷ 10 = ₹1,00,000.
Depreciation for 2 years (2024-25 and 2025-26) = ₹2,00,000.
Carrying amount at 31 March 2026 = ₹10,00,000 − ₹2,00,000 = ₹8,00,000.
Revaluation increase = ₹9,60,000 − ₹8,00,000 = ₹1,60,000.
There was no earlier decrease on this asset charged to profit and loss, so the whole increase is credited to revaluation surplus (paragraph 42).
Entry: Machinery A/c Dr ₹1,60,000 to Revaluation Surplus ₹1,60,000.
Disclosure: measurement basis (revaluation model) for the class, depreciation method, useful life or rate, and the revaluation movement in the reconciliation of carrying amount (paragraph 81(e)(iv)).

Answer: Revaluation surplus of ₹1,60,000 is credited; machinery is carried at ₹9,60,000 and the class is disclosed with its basis, method, life and reconciliation.

Example 2

Kaveri Ltd has machinery with gross block ₹20,00,000 and accumulated depreciation ₹8,00,000 on 1 April 2025. On 1 October 2025 it bought new machinery for ₹6,00,000. On 1 January 2026 it sold, for ₹2,50,000, an old machine whose gross cost was ₹4,00,000 and whose accumulated depreciation on 1 April 2025 was ₹2,40,000. Depreciation is straight-line at 10% of original cost per year, charged on a time basis, with no residual value. Compute the depreciation for 2025-26, the profit or loss on sale, and the closing gross block, accumulated depreciation and carrying amount.

Show the solution

Depreciation on the sold machine up to 31 December 2025 = ₹4,00,000 × 10% × 9/12 = ₹30,000.
Accumulated depreciation on the sold machine at sale = ₹2,40,000 + ₹30,000 = ₹2,70,000.
Carrying amount of the sold machine = ₹4,00,000 − ₹2,70,000 = ₹1,30,000.
Profit on sale = ₹2,50,000 − ₹1,30,000 = ₹1,20,000.
Depreciation on other opening machinery: gross ₹16,00,000 × 10% = ₹1,60,000 for the full year.
Depreciation on new machinery = ₹6,00,000 × 10% × 6/12 = ₹30,000.
Total depreciation for 2025-26 = ₹30,000 + ₹1,60,000 + ₹30,000 = ₹2,20,000.
Closing gross block = ₹20,00,000 + ₹6,00,000 − ₹4,00,000 = ₹22,00,000.
Closing accumulated depreciation = ₹8,00,000 + ₹2,20,000 − ₹2,70,000 = ₹7,50,000.
Closing carrying amount = ₹22,00,000 − ₹7,50,000 = ₹14,50,000.
Check: opening carrying amount ₹12,00,000 + additions ₹6,00,000 − carrying amount of disposal ₹1,30,000 − depreciation ₹2,20,000 = ₹14,50,000.

Answer: Depreciation ₹2,20,000; profit on sale ₹1,20,000; closing gross block ₹22,00,000; accumulated depreciation ₹7,50,000; carrying amount ₹14,50,000.

Exam tips

In theory questions, structure the answer as paragraph 81 items first, then paragraph 82 items. Give each a short line.
In numericals, show a columnar schedule of gross block and accumulated depreciation. It earns step marks even if one figure is wrong.
Always check for an earlier revaluation decrease or existing surplus before deciding where a revaluation difference goes.
For MCQs, test the exact rule: increases go to surplus, decreases to profit and loss unless surplus exists, and surplus transfers do not pass through profit and loss.
State your assumptions, such as time-based depreciation or nil residual value, when the question is silent.

Practice questions from Property, Plant and Equipment (AS 10)

Disclosure Requirements and Practical Problems in AS 10 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Disclosure Requirements and Practical Problems in AS 10: frequently asked questions

What are the main disclosures required under AS 10?

For each class you disclose the measurement basis, depreciation methods, useful lives or rates, gross carrying amount and accumulated depreciation at the start and end of the period, and a reconciliation of carrying amount. You also disclose pledged assets, restrictions on title, construction expenditure, contractual commitments and assets held for disposal.

Do I need to mention if my useful lives differ from the statute?

Yes. Paragraph 81(c) says that if the useful lives or rates used differ from those specified in the statute governing the enterprise, a specific mention of that fact must be made.

Where does a revaluation decrease go?

It is charged to the statement of profit and loss. However, it is debited to revaluation surplus to the extent of any credit balance in the surplus for that same asset (paragraph 43).

How often must assets be revalued?

It depends on changes in fair value. When the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is required. Volatile assets may need annual revaluation, while others may be revalued every three or five years (paragraph 37).